A detailed report on Management Discussions and Analysis is given below as required
under Regulation 34 of the SEBI Listing Regulation, 2015:
Industry overview
Technology, over the past few years, has changed the way businesses operate, creating
new business models and multibillion opportunities for service providers. Across
industries, market players are realizing that digital is the most effective way to ensure
future growth and transform client experience. Digital transformation has led to increased
investments in cloud transformation, cloud migration, application, data modernization and
digital/data engineering. Businesses have shifted focus from cost containment to robust
operating models that are designed to drive outcomes.
Global economic activity experienced slowdown in the fiscal year 2023. Central banks
across the globe have been raising interest rates; the near-term outlook remains uncertain
with downside risks from tighter monetary policy, inflation and recession, pressures in
global energy markets reappearing, and financial market volatility. Rapid tightening of
fiscal policies by central banks has exposed vulnerabilities both among banks and non-bank
financial institutions. This has resulted in slowdown in demand and lead to delayed
decision making.
Technology service providers are geared to support enterprises across various
industries to overcome the current challenges, with a wide range of offerings in digital
transformation, research and development and technology infrastructure. The technology
industry is expected to accelerate and drive decisions in fiscal year 2024 based on
investments made by clients in cost optimization, operational excellence, digital
transformation, productivity improvement, innovation in products and services, talent
management, and environmental, social, and governance initiatives. Technology contracts
will include a significant digital component, led by digital transformation,
cloudification and platform engineering.
According to a recent Gartner survey, Infrastructure-as-a-Service (IaaS) is forecast to
experience the highest end-user spending growth in 2023 at 30.9%, followed by
platform-as-a-service (PaaS) at 24.1% (refer table below). Gartner predicts that by 2026,
75% of organizations will adopt a digital transformation model predicated on cloud as the
fundamental underlying platform and while cloud infrastructure and platform services are
driving the highest spending growth, SaaS remains the largest segment of the cloud market
by end-user spending.
(USD in millions)
|
2022 |
2023 |
2024 |
Cloud Application Infrastructure Services (PaaS) |
111,976 |
138,962 |
170,355 |
Cloud Application Services (SaaS) |
167,342 |
197,288 |
232,296 |
Cloud Business Process Services (BPaaS) |
59,861 |
65,240 |
71,063 |
Cloud Desktop-as-a-Service (DaaS) |
2,525 |
3,122 |
3,535 |
Cloud Management and Security Services |
34,487 |
42,401 |
51,871 |
Cloud System Infrastructure Services (IaaS) |
114,786 |
150,310 |
195,446 |
Total Market |
490,977 |
597,323 |
724,566 |
The total Electronic Health Records (EHR) market in the US in 2022 was $130 billion and
expected to grow at a CAGR of 5.3% from 2023 till 2030. The effectiveness of EHR software
as a tool for productivity enhancement, patient engagement and analysis of insights using
clinical data to improve healthcare management and health analytics is driving the demand
for our services. Hospital care management can be elevated by establishing long lasting
customer relationships by offering best in class solutions that satisfy client demands.
Enterprises are prioritizing investments in operational excellence and business
transformation initiatives; significant opportunities exist as clients realign vendor
portfolios across industry verticals. Industry verticals like Banking & Financial
services is showing signs of caution in their technology spending in response to financial
market instabilities, cost pressures, lingering inflation, and weak consumer spending.
Healthcare is expected to be the bright spot and stay resilient.
Company overview
SecureKloud is an industry-recognized global leader in digital transformation solutions
including managed services, cloud enablement, cyber security, and AI powered data
analytics. Our experience in cloud services and consulting for highly regulated industries
extends more than a decade. Empowering enterprises to embrace and evolve with cloud has
always been SecureKlouds mission of changing the world through digital transformation.
Our comprehensive suite of services, solutions and platforms enables some of the worlds
leading enterprises to accelerate digital transformation.
Our Business Model
We provide our solutions primarily to Health Systems, Life Science Companies and
Enterprises who directly purchase our Cloud offerings. We earn revenue from providing
advisory and consulting services, 24x7 Managed Services and SaaS based Platform offerings
to our customers.
Our Strategy
We employ a multipronged go-to-market strategy to increase adoption of our solutions to
new customers and up-sell to our existing customers. We principally sell our solutions
through our direct salesforce. Our sales team possesses deep domain expertise in selling
cloud transformation services and bring substantial experience selling to key decision
makers within our current and prospective customer organizations (CIOs and CTOs). We
believe the effectiveness of our sales organization is evidenced by growing adoption of
our managed services by large strategic customers, recent traction with health systems and
the demand for add-on offerings from existing customers. We have chosen to invest
significantly in growing our customer base, and plan to continue adding new customers and
expanding our relationships with existing customers, which we believe will allow us to
increase margins over time. When a customer renews their contract or purchases additional
services, the value realized from that customer increases because we generally do not
incur significant incremental acquisition or implementation costs for the renewal or
expansion. We believe that as our customer base grows and a higher percentage of our
revenue is attributable to renewals and upsell or cross-sell to existing customers,
relative to acquisition of new customers, associated sales and marketing expenses and
other upfront costs decreases as a percentage of revenue. We have strategically curated
our offerings to ensure we have a compelling value proposition that resonates with each
identified customer segment. Based on our experience, the opportunity to cross-sell is
meaningfully enhanced once a customer has been on-boarded onto our platforms. Our client
success team provides strategic insights and day-to-day account support to our customers.
They are focused on existing customer retention, cross-sell, and upsell. We have
selectively formed strategic alliances to further drive customer acquisition and adoption
of our solutions. We believe the breadth of our go-to-market enables us to reach customers
of nearly every size and across markets.
Our product offerings
CloudEz
Pre-built, HITRUST certified, highly automated, fully managed, secure & compliant
multi-cloud platform that supports public/ private/hybrid deployments to power your cloud
for business to innovate faster, lower costs and drive new business models.
CloudEz, a HITRUST certified automated and secure, cloud foundation platform enables
enterprises accelerate cloud adoption. CloudEz framework enables customers manage their
cloud infrastructure across public, private and hybrid cloud infrastructure. CloudEz is
deployed in highly regulated industries where data security is foremost. The CloudEz
delivers an automated infrastructure compliant framework that ensures continuous
compliance in highly regulated industries.
According to Precedence Research, the global cloud computing market size is projected
to hit around US$ 1,614.10 billion by 2030 and witness growth at a CAGR of 17.43% from
2022 to 2030. The accelerated adoption of Cloud among global organizations and the rising
focus on data security and compliance requirements provides significant opportunity for
our platforms to be adopted by enterprises who seek to scale up fast. Configured to
HITRUST, SOC2, HIPAA, PCI, GDPR standards, security and regulatory protocols, customers
are assured of reducing the risk of data breaches while ensuring smooth transition of
their cloud infrastructure across public cloud service provider.
DataEz
A data analytics & AI engineering platform which allows you to focus on your data
and its insights.
According to Fortune Business Insights, the global Big Data Analytics Market size is
projected to reach USD 745.15 billion by 2030, at a CAGR of 13.5% during the forecasted
period. Analysis of structured and unstructured databases with Big Data Analytics provides
better insights on hidden patterns, correlation, converting market place trends and more.
Big Data analytics enhances the capacity for data-driven decision making by enabling
businesses to manage, process and simplify large datasets in real time. With the rising
demand for customer retention, better lead management, and client experience management,
the customer analytics segment is anticipated grow significantly.
Our DataEz tool, a cloud-based data analytics and AI engineering platform enables
enterprises to power insight-driven decision making capabilities. It provides highly
modular, scalable, and API-driven solutions to unlock data powered insights. Configured to
HITRUST standards, DataEz is a zero-code platform, which can be easily deployed in hours
with zero development time.
Neutral Zone
Powering seamless third-party data sharing and collaboration for personalized
healthcare and clinical studies while maintaining control of the IP.
With a neutral zone, innovation no longer depends solely on the ability of one company
to capture and analyze data. Instead, organizations partner with a third-party algorithm
provider to create a secure area where AI/ML and other advanced algorithms may be applied
to the data. Its an approach that protects the security of the data as well as each
organizations intellectual property (IP). It also positions organizations to harness the
power of patient data at scale?their own and those of data research collaborators.
At a time when 70% of decision makers for data and data analytics are expanding their
use of external data (according to Forrester report), a neutral zone supports access to a
broad range of data?from real-world evidence to information from clinical trials?as well
as data science capabilities in days rather than months.readabl.ai
An AI powered solution that converts faxes, scanned documents & blocks of text into
patient/clinical information into intelligence and integrates with your systems.
Health Information Management (HIM) and clinical staff are overwhelmed with paper; and
thousands of man-hours is lost moving paper from one point to another. readabl.ai extracts
clinical information from faxes and other medical reports and through an automated AI/ML
framework, converts the unstructured paper data into machine readable clinical information
thereby improving patient care and health outcomes. readabl.ai is offered on a
Software-as-a-Service (SaaS) subscription model.
24x7 Managed Services
End-to-end next generation managed services to streamline your IT functions &
simplify cloud management to derive maximum value from your technology investments related
to cloud (DevOps, SOC), data and health IT applications.
EHR implementation and Optimization
HCTIs in-depth, EHR expertise helps hospitals and health systems plan and implement
inpatient and outpatient systems. Our focus is on operational alignment, process
enhancement, and measurable outcomes.
Ransomware
The increasing threat of data breaches and cyber attacks exposing confidential and
protected personal information is driving widespread demand for cyber security services.
Looming ransom ware threats can severely impact patient care, disrupt operations, cause
financial losses, put community lives at risk, and force hospitals to shutter operations.
HCTI has launched a new initiative aimed at preparing healthcare organizations with
critical tools and guidance for preventing and responding to ransom ware incidents. With
our new ransom ware initiative, our Companys goal is to take a proactive leadership role
in educating and equipping rural hospitals, community hospitals, and large health systems
in need with critical resources for improving their preparedness, prevention, detection,
response, and recovery from ransom ware incidents.
Internal control system and their adequacy
SecureKloud has aligned its current systems of internal financial control with the
requirement of Companies Act, 2013 and ensured its effectiveness.
SecureKlouds internal controls are commensurate with its size and the nature of its
operations. These have been designed to provide reasonable assurance with regard to
recording and providing reliable financial and operational information, complying with
applicable statutes, safeguarding assets from unauthorized use, executing transactions
with proper authorization and ensuring compliance with corporate policies.
SecureKlouds management assessed the effectiveness of the companys internal control
over financial reporting (as defined in Regulation 17 of SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 (SEBI LODR) as of March 31, 2023. The statutory
auditors of the gCompany have audited the financial statements included in this annual
report and have issued an attestation report on the companys internal control over
financial reporting (as defined in section 143 of Companies Act, 2013). The Company has
also appointed the internal auditors to oversee and carry out the internal audit of its
activities based on an internal audit plan, which is reviewed in consultation with the
statutory auditors and approved by the audit committee.
Based on its evaluation (as defined in section 177 of Companies Act 2013 and Regulation
18 of SEBI LODR), Companys Audit Committee has concluded that, as of March 31, 2023, the
companys internal financial controls were adequate and operating effectively.
The following tables gives the consolidated results of the Company
Financial Particulars |
For the year ended March 31, 2023 |
% of Revenue |
For the year ended March 31, 2022 |
% of Revenue |
Changes |
| Amount |
% |
Revenue |
45,844 |
100.0% |
37,940 |
100.0% |
7,904 |
20.8% |
Cost of Revenue |
34,950 |
76.2% |
28,406 |
74.9% |
6,544 |
23.0% |
Gross Profit |
10,894 |
23.8% |
9,534 |
25.1% |
1,360 |
14.3% |
Research and Development |
4,147 |
9.0% |
5,004 |
13.2% |
(857) |
(17.1)% |
Selling, General and Administration expenses |
14,050 |
30.6% |
12,821 |
33.8% |
1,229 |
9.6% |
Depreciation and Amortization |
1,798 |
3.9% |
1,141 |
3.0% |
657 |
57.6% |
Other income |
207 |
0.5% |
103 |
0.3% |
104 |
101.0% |
Finance expenses |
1,032 |
2.3% |
1,196 |
3.2% |
(164) |
(13.7)% |
Income tax expenses |
(51) |
(0.1)% |
(734) |
(1.9)% |
683 |
(93.1)% |
Profit after tax |
(9,875) |
(21.5)% |
(9,791) |
(25.8)% |
(84) |
|
We report our business under these line of services:
• Software services
• Managed services and support
• Platform services Software Services
The Company earns revenue primarily through the sale of software services that is
generated from providing strategic advisory, implementation, and development services. The
Company enters into Statement of Work (SOW) which provides for service obligations that
need to be fulfilled as agreed with the customer. The majority of our software services
arrangements are billed on a time and materials basis and revenues are recognized over
time based on time incurred and contractually agreed upon rates. Certain software services
revenues are billed on a fixed fee basis and revenues are typically recognized over time
as the services are delivered based on time incurred and customer acceptance.
Managed Services and Support
Managed Services and Support include post implementation support and cloud hosting.
Managed Services and Support are a distinct performance obligation. Revenue for Managed
Services and Support is recognized ratably over the life of the contract. Platform
Services
During the previous year, the Company launched CloudEz, DataEz and readabl.ai under
SaaS model. The revenue contains a series of separately identifiable and distinct services
that represent performance obligations that are satisfied over time.
The following table provides revenue by the line of service:
|
|
|
|
|
Changes |
Financial Particulars |
For the year ended March 31, 2023 |
% of Revenue |
For the year ended March 31, 2022 |
% of Revenue |
Amount |
% |
Software Services |
30,230 |
65.9% |
23,319 |
61.5% |
6,911 |
29.6% |
Managed Services and Support |
11,831 |
25.8% |
11,497 |
30.3% |
334 |
2.9% |
Platform Services |
3,783 |
8.3% |
3,124 |
8.2% |
659 |
21.1% |
Total revenue |
45,844 |
100.0% |
37,940 |
100% |
7,904 |
20.8% |
Revenue increased by INR 7,904 lakhs, or 20.8% amounting to INR 45,844 lakhs for the
year ended March 31, 2023 as compared to INR 37,940 lakhs for the year ended March 31,
2022. Revenue from Software Services increased by INR 6,911 lakhs or 29.6% on account of
acquisition of Devcool Inc. The Software Services are typically short-term engagements to
provide software consulting and development services, which do not require continual
third-party maintenance. Managed Services and Support such as IT cloud hosting and support
call for services on a continuous basis and allow for strengthening of client
relationships which can lead to additional engagements from the client. Therefore, the
Company is determined to focus on increasing the Managed Services & Support and
Platform Services revenue to enhance our relationship and long-term engagement with our
customers.
Factors affecting revenues of Software Services, Managed Services and Support and
Platform Services
Our strategy is to achieve long-term revenue growth through Managed Services and
Support and Platform Services to existing and new clients within our target market. This
also helps in retaining existing customers by leveraging our Managed Services and Support
and Platform Services as a growth agent. This renewed focus on driving demand for
subscription and platform- based model will help us in expanding our customer base and
enhance customer retention. Software Services contracts are driven by time and material
and on-site employees delivering services at customers location.
|
|
|
|
|
Changes |
Financial Particulars |
For the year ended March 31, 2023 |
% of Revenue |
For the year ended March 31, 2022 |
% of Revenue |
Amount |
% |
Healthcare and Life Science |
34,247 |
74.7% |
26,583 |
70.1% |
7,664 |
28.8% |
Information, communication & technology (ICT) |
11,597 |
25.3% |
11,357 |
29.9% |
240 |
2.1% |
Total revenue |
45,844 |
100.0% |
37,940 |
100.0% |
7,904 |
20.8% |
Revenue from Healthcare and life science increased by INR 7,664 lakhs, or 28.8% to INR
34,247 lakhs for the year ended March 31, 2023, as compared to 26,583 lakhs for the year
ended March 31, 2022. The growth in Healthcare and life science revenue is primarily due
to acquisition of Devcool Inc in November 2021 as well as new business from our existing
customers reflecting continued adoption and acceleration in the demand for cloud
technology. Revenue from ICT increased by INR 240 lakhs, or 2.1% to INR 11,597 lakhs for
the year ended March 31, 2023, as compared to INR 11,357 lakhs for the year ended March
31, 2022 due to increase in revenue from existing and new customers.
Cost of revenue and gross profit
|
|
|
|
|
Changes |
Financial Particulars |
For the year ended March 31, 2023 |
% of Revenue |
For the year ended March 31, 2022 |
% of Revenue |
Amount |
% |
Revenue |
45,844 |
100.0% |
37,940 |
100.0% |
7,904 |
20.8% |
Cost of Revenue (exclusive of depreciaiton /amortization) |
34,950 |
76.2% |
28,406 |
74.9% |
6,544 |
23.0% |
Gross Profit |
10,894 |
23.8% |
9,534 |
25.1% |
1,360 |
14.3% |
The gross profits have increased by INR 1,360 lakhs or 14.3% to INR 10,894 lakhs for
the year ended March 31, 2023 as compared to INR 9,534 lakhs for the year ended March 31,
2022. Even though the gross profit has increased in absolute terms due to increase in
revenue, the margin percentage has reduced primarily due to increase in operational
expenses related to delivery of software services.
Research and Development
|
|
|
|
|
Changes |
Financial Particulars |
For the year ended March 31, 2023 |
% of Revenue |
For the year ended March 31, 2022 |
% of Revenue |
Amount |
% |
Research & Development |
4,147 |
9.0% |
5,004 |
13.2% |
(857) |
(17)% |
Research and development expense consists primarily of employee-related expenses
engaged in the development and enhancement of our cloud-based platform applications. These
also include certain third-party consulting fees. Research and development expenses have
decreased by INR 857 lakhs or 17% to INR 4,147 lakhs for the year ended March 31, 2023, as
compared to INR 5,004 lakhs for the year ended March 31, 2022. The expenses incurred
during the current year was towards investment in Blockedge Web 3 development, Neutral
zone related spends as well as expenses incurred towards maintaining our existing
platforms.
Selling, General and Administration expenses
|
|
|
|
|
Changes |
Financial Particulars |
For the year ended March 31, 2023 |
% of Revenue |
For the year ended March 31, 2022 |
% of Revenue |
Amount |
% |
Selling, General and Administration expenses |
14,050 |
30.6% |
12,821 |
33.8% |
1,229 |
10% |
Selling, general and administrative expenses consist primarily of employee-related
expenses for employees who are responsible for management information systems, sales and
marketing, administration, human resources, finance, legal, and executive management. The
selling, general and administrative expenses also include operating expenses for marketing
programs, research, trade shows, and brand messages, and other public relations costs,
occupancy expenses (including rent, utilities, and facilities maintenance), professional
fees, consulting fees, insurance, travel, contingent consideration, transaction costs,
integration costs, and other expenses. Selling, general and administrative expenses have
increased by INR 1,229 lakhs or 10% to INR 14,050 lakhs for the year ended March 31, 2023,
as compared to INR 12,821 lakhs for the year ended March 31, 2022. The increase is
primarily due to one time cost relating to contingent consideration provided during the
year and provision made towards statutory penalties.
Finance expenses
|
|
|
|
|
Changes |
Financial Particulars |
For the year ended March 31, 2023 |
% of Revenue |
For the year ended March 31, 2022 |
% of - Revenue |
Amount |
% |
Finance expenses |
1,032 |
2.3% |
1,196 |
3.2% |
(164) |
(13.7)% |
Finance expenses have decreased by INR 164 lakhs or 13.7% to INR 1,032 lakhs for the
year ended March 31, 2023, as compared to INR 1,196 lakhs for the year ended March 31,
2022, this is primarily due to repayment of borrowings during the current year.
Risk Management
At Securekloud Technologies Limited, we understand the importance of risk management to
achieve our strategic objectives, protect stakeholder value and deliver quality services
to clients. Our Enterprise Risk Management policy (ERM) helps identifying, mitigating and
managing diverse categories of risks that may impact our strategic objectives and provides
an environment to bring the best of talent and technology for the communities we serve.
Risk Governance
The risk governance function is led by the BOD and Audit Committee, which plays a
pivotal role in framing, monitoring and reviewing our ERM policy and constantly assessing
key business risks of our Organization. The senior leadership team share responsibility
for managing risks through the risk committee. The risk owners are senior leaders from
customer facing or support functions tasked with the responsibility of driving and
monitoring the progress of mitigation strategies.
Strategic Risks
Securekloud Technologies Limited operates in an environment where changes occur
frequently; failure to adapt with the changing technology or client needs, ability to
attract talent and an ever evolving operating model can jeopardize growth. We also face a
risk when clients are concentrated in a certain business segment or vertical or geography;
and any adverse impact to that region or industry could pose a significant risk to the
company.
Information, Cyber Security Risks
Securekloud Technologies Limited faces significant risks in information and
cybersecurity, when it comes to protection of client and company data. The risk of data
breaches due to negligence or inadvertence can have a negative impact on our existing
business and growth.
Talent Management
Securekloud Technologies Limited faces the risk of not fulfilling resource demands,
which could lead to a negative impact on revenue growth and customer dissatisfaction.
There is significant risk of higher attrition which can affect project timelines, delivery
capability and growth plans. Managing talent and meeting the demand for talent poses a
significant risk to the company.
Risk Mitigation
We have invested in identifying latest industry and have been building capabilities to
ensure a comprehensive portfolio, and be a partner of choice in our services and platform
offerings. As part of a long-term strategy, our vertical share is well-balanced and
evolving continuously. We are gradually shifting our business portfolio from software
consulting to managed services.
Securekloud Technologies Limited cyber preparedness is of the highest order and we have
implemented a robust and comprehensive Information Security Management System (ISMS) and
invested in high-end security technology solutions across the company. We conduct periodic
internal assessments, do external audits to assess our preparedness, and we have obtained
third-party certifications such as HITRUST, HIPAA, GxP and ISO 27001.
We actively promote increasing hire at entry levels to ensure we have enough trained
and employable talent. Our continuing work-from-home model which provides flexibility to
employees and enhancing the secure digital remote workspace ecosystem remain key areas of
focus to ensure workforce safety and enhance technology capabilities for handling remote
business operations.
Human Resources
During the financial year 2022, the implementation of HRMS was kicked off and several
modules were configured for use. Some of the policies were refined/refreshed based on the
market changes.
Virtual induction
Interviews are conducted both in person and virtually and the entire HR process from
candidate selection to induction were digitalized.
Work from home policy
With the reopening of the new office, the Company has sent an announcement to all the
associates to work from the office in a hybrid model.
Training
All employees undergo a 3-month online project training program. Further, employees are
encouraged to get more professional certifications in areas like AWS, Azure, IAM,
Big-Data, Analytics, etc., where they specialize. We are proud to state that more than 150
of our technical staff hold professional certifications. As part of knowledge sharing,
once a month brown bag sessions are conducted to discuss the latest technological
developments in cloud and security space.
Medical benefits
During the year, the Company continued to extend the group medical insurance to cover
parents, spouse and kids. The Company has also provided personal accident cover for all
its employees. The vendor that is currently processing our claims has made the process
very easy for our employees to raise and settle claims.
Rewards and Recognition
We continued our rewards and recognition program. These are given to employees as
instant and periodic awards for individuals as well as teams. The period of awards goes
through vetting by a panel that ensures the standards and quality of nominations as well
as objectives across the organization. In addition to the above, we also have awards to
encourage innovation, brand ambassadors, and socially responsive individuals.
Performance Management
Performance appraisal was completed for all the associates based on their performance
for the financial year 2022. The new Performance Evaluation Policy further improves
objectiveness with an increased frequency of feedback to employees.
Talent Acquisition
We continued to recruit the best talents from academia and industry. We have hired more
than 120 employees and 11 interns during the financial year 2022-23. With a continued
focus on diversity, the womens workforce has increased to 26% of the total headcount
compared to the previous year. To continue to bring in fresh talent into the organization,
we actively went to five colleges and ran a recruitment drive and offered to a select few
who successfully passed the stringent process.
Innovation
We encourage innovation at Securekloud by enabling technically strong and out of the
box thinkers to ideate and develop credible ideas into POCs. This helps our associates to
not only understand the process of taking an idea to fruition, but also learning the
process of building a business case around an idea.
Attrition management
We are continuing the process of ensuring internal parity among existing employees,
which ensures parity to a significant extent across various skill sets. We continuously
monitor the market movements in terms of compensation and correct our compensation policy
to reflect the market trends. This keeps us competitive in the market and helps us to
attract skilled resources,
Employee Engagement
We have organized many employee engagement activities like offsite, inhouse cultural
events, indoor and outdoor sports.
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